Is COST a good stock to buy? We came across a bullish thesis on Costco Wholesale Corporation on Investomine’s Substack. In this article, we will summarize the bulls’ thesis on COST. Costco Wholesale Corporation’s share was trading at $1,005.30 as of March 9th. COST’s trailing and forward P/E were 53.85 and 49.51, respectively according to Yahoo Finance.
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Costco Wholesale Corporation, together with its subsidiaries, engages in the operation of membership warehouses in the United States and internationally. COST started fiscal year 2026 with a resilient quarter, demonstrating its enduring strength in global retail.
Despite ongoing inflationary pressures, wage increases, and competitive pricing, Costco delivered steady revenue growth of $67.3 billion, up 8.3% year-over-year, driven by net sales of $65.98 billion (+8.2% YoY) and membership fees of $1.33 billion (+14% YoY). Net income rose 11.3% to $2.00 billion, with diluted EPS of $4.50, reflecting both operational efficiency and robust membership economics.
Comparable sales grew 6.4% company-wide, while digitally enabled sales surged 20.5%, highlighting the strength of Costco’s omnichannel strategy. Membership fees, a high-margin and predictable revenue stream, continue to expand faster than merchandise sales, providing a structural buffer against margin pressure and reinforcing customer loyalty. International markets remain a long-term tailwind, with Canada and other regions outperforming, and Costco’s global warehouse expansion still far from saturated.
Operating income increased 12.2% to $2.46 billion, though margins remain structurally thin by design, as the company prioritizes price leadership over leverage. Costco’s balance sheet is exceptionally strong, with $16.2 billion in cash, $5.7 billion in long-term debt, and operating cash flow of $4.7 billion, enabling disciplined capital allocation toward new warehouses, dividends, and modest share repurchases.
While valuation remains elevated and margin expansion is constrained, Costco’s high-quality business, consistent cash generation, and defensive growth profile support long-term compounding potential. Any temporary pullback in the stock, driven by cost pressures or market volatility, could provide an attractive entry point for investors seeking exposure to a resilient retailer with durable growth and exceptional membership economics.
Previously, we covered a bullish thesis on Costco Wholesale Corporation (COST) by FluentInQuality in March 2025, which highlighted its high-retention membership model, operational efficiency, and bulk retail strategy. COST’s stock price has depreciated by approximately 3.96% since our coverage. Investomine shares a similar view but emphasizes fiscal Q1 2026 results, including revenue growth, digital sales strength, and robust cash generation, reinforcing long-term durability.
Costco Wholesale Corporation is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 106 hedge fund portfolios held COST at the end of the fourth quarter which was 88 in the previous quarter. While we acknowledge the risk and potential of COST as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than COST and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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Disclosure: None.
